Obstacles to Economic Development of Bangladesh & way for overcome

Bangladesh is located in South Asia and shares its borders with India. It is the seventh most populous country in the world and is mostly densely inhabited. The poverty level, however, has fallen by more than 20%, helped by its prominent agricultural sector. The Bangladeshi economy is helped by its big garment sector, which contributes more than two-thirds of the country’s trade. The major challenge to prosperous growth is the vulnerability of the land to cyclones and floods. However, even with such challenges, Bangladesh has experienced a growth rate of 5% since 1990. This growth has been helped by remittances from expatriates as well.

 Bangladesh’s economy is characterized as poor and developing, despite several improvement efforts at the national and international levels. In 2008, the per capita income of the country stood at US$520, while the world average is $10,200. As of 2009, Bangladesh had an estimated population of 162,221,000 people. The literacy rate in the country is about 41%. The poverty rate is very high. However, over the years, there has been considerable improvement in the poverty level as well as health and education levels.

 Over 50% of Bangladesh’s GDP comes from the service sector. Despite this, two-thirds of the country’s population is engaged in agricultural activities, with most of them growing paddy.  

Bangladesh Economy: Major Constraints

Here are some of the major impediments to the growth of Bangladesh’s economy:

Widespread political and bureaucratic corruption

Economic competition relative to the world

Serious overpopulation

Widespread poverty

Frequent cyclones and floods

Political instability

Poor infrastructure

Insufficient power supplies

Slow implementation of economic reforms
Obstacles to Economic Development of Bangladesh
Due to many socio-economic and political reasons, developing country like Bangladesh cannot prosper quickly.

1. Dependency on Agriculture: Though the economy of Bangladesh mostly depends on agriculture its production capacity is low. In spite of the need of development in agriculture is necessary its advancement is slow.

2. Underdeveloped Agricultural System: The agricultural system in Bangladesh is underdeveloped. The use of modern equipment in agriculture is limited. And there is instability in price of agricultural products.

3. Lack of Capital: Since the per capita income in Bangladesh is low, rate of raising savings and capital is also low. Thus it is not possible to invest as much needed for quick development.

4. Lack of entrepreneur: Entrepreneur are very important for development. In Bangladesh there is a lacking of entrepreneur who are efficient, experienced and ready to take risk. Due to lack of entrepreneur use of savings and capital is low. And

for political and economical instability entrepreneur are not ready to take risks and do not come forward as the environment is not investment friendly.

5. High Population: Bangladesh is a country of high population. It is not being possible to use this population in production and work. A big portion of national income is used for this portion of population which creates obstacles in development.

6. Vicious Cycle of Poverty: One of the main obstacles in development of Bangladesh economy is the vicious cycle of poverty. According to Professor Narks, "A country is poor because it is poor." Low production, low income, low demand and savings, low

Investment and low capital are called the vicious cycle of poverty.

7. Political Instability: In Bangladesh there is political uncertainty and instability. It is not favorable for domestic and foreign investment. Not only this, the long term development plan is also hampered by this.

8. Dependency on Foreign Aid: The economy of Bangladesh is dependent on foreign trade and relationship. It faces obstacles in trade for imbalanced competition of developed countries and various conditions. On the other hand dependency on foreign aid and investment on agriculture, manufacturing and business creates obstacles in development of self-reliance Bangladesh.

9. Weak Marketing: Weak marketing exists everywhere in Bangladesh. Market price is not profitable for producer due to lack of awareness, weakness in communication and transport system, fund.

10. Obstacles in Application of Technology: Modern technologies cannot be used in production  due to lack of modern technology, imported technologies are costly and risky in use.

11. Lack of Educated and Skilled Human Resource: Bangladesh is still lacks the skilled man power and technically educated people. For this reason productive sectors have insufficient production.

How to overcome economic obstacles:
1. Importance on Agriculture: Agriculture is an important sector of Bangladesh economy. But the production  capacity in agriculture of our country is very low compared with the developed countries due to primitive methods, lack of good quality seeds, irrigation and agricultural loans, and for natural calamities. But the situation is improving day by day. Now there is more availability of good quality seeds, fertilizers, pesticides and irrigation. Thus the production is also increasing.

2. Projects for Industrialization: The development process in industrialization in Bangladesh is very slow. Thus it is necessary to announce a new policy for industrialization to increase the rate of development. National policy was declared on this purpose in the year 2010. The aim of this policy is to increase the employment, participation of women in industrialization and reduce poverty. To achieve these goals the government has decided to reduce barriers on investment, tax free investment, encourage the private investment, ensure free flow of capital, increase foreign investment, create markets in abroad and establish labor intensive industries. The benefits from these projects can be seen now.

3. Rise in Per Capita Income: The per capita income in Bangladesh is low compared to developed countries as the production of agriculture and industry is lower in this country, population is high and opportunities of employment is low. At current rate the per capita income is 848 US dollar and per capita GDP is 772 US dollar. Though the rate is slow but our per capita income is increasing.

4. Rise in Standard of Living: Due to low per capita income 31.50% people live below the poverty line. Though the progress is slow but the standard of living is increasing for which the average life expectancy has increased to 67.2 years. 97.8% people drink pure drinking water and the literacy rate is (age 7+) 57.9%.

5. Rise in Supply of Capital for Investment: Our savings is low due to low per capita income. Thus investment or accumulation of capital is also low. Currently the government has taken many encouraging policies to attract

Investors. For this reason domestic and foreign investment is increasing. In the fiscal 2010-11 the total investment was 24.73% of the GDP. Increase in investment increases the production of our agriculture and industry sector. It is helpful to reduce poverty in our country.

6. Food Deficiency and Malnutrition: Though it is an agriculture based country, it is suffering from food deficiency and malnutrition for a long time. Thus the government has given highest importance in agriculture sector to make Bangladesh self-sufficient in food production. For this reason the use of good quality seeds, fertilizers and technology has increased in the production over the past few years.
7. Decrease in Population Growth: Bangladesh is an over populated country. Total population of this country is 14 crore 97 lakh 72 thousand 364. The population density is 964 people per square feet and the population growth is 1.34%, which was 1.48% in year 2001. Though population is decreasing, it is a very small country and thus world's 9th most populated country.

8. High Unemployment: In our country savings is low compared with population. Thus the accumulation of capital is low. Unemployment is increasing as there is scarcity of capital which reduces employment opportunity in agriculture and industry sector. But domestic and foreign investment is increasing in Export Processing Zone (EPZ). To attract the foreign investment various encouraging polices have taken which is increasing foreign investment and the economy is in progress. Thus it can be hoped that the unemployment problem will be reduced in future.

9. Increase in the Use of Natural and Human Resources: Natural resources are the basic element in socio-economic development and in raising the standard of living. Currently the use and detection of these natural resources has increased. The combined contribution (approximate) of natural gases, unrefined petroleum and coal and other mineral resources will be 1.26% in the fiscal year 2011-12. 75% use of the fuel comes from natural gases. Till now total 23 gas fields have been discovered from which 18 gas fields are being used to extract gases through 79 wells. Gas is mostly use in the production of electricity. To ensure the fuel security the refining capacity of Eastern Refinery is being increased and SPM project has started to deport refined and unrefined fuel in the deep sea. The total storage of our 5 coal mines is almost 2700 million tons. 65% of the extracted coal is used in Barapukuria power station to produce electricity. Various public and private projects are in progress for the development of human resources. Among these family planning, women and children, social welfare, youth and sports development, culture, labor and employment etc. are important.

10. Deficit in Foreign Trade: To meet the various needs and development of our mass population we have to spend lots money to import various products which is much higher than our export earnings. For this reason there is an imbalance in the trade. Currently our export has increased thus the trade deficit is decreasing.

11. Dependency on Foreign Aid: It is not possible to collect all the money we require for the economic development from within the country. So, we have to depend on foreign aids. But the good thing is the dependency on foreign aid is decreasing. Because of inadequacy, uncertainty and lengthy Coal Mine process of these aids the development process is hampered. So, the dependency on internal sources is increasing. In the 5th Five Year Plan (1997-2002) the accumulation of internal resources was estimated 61.45%.

12. Development of Economic and Social Infrastructure: To increase the production, components of production and proper distribution of products in the market and to maintain the stability in price level the economic infrastructure such as roads, railway and naval system, electricity and telecommunication system play a vital Role. The government has taken various steps to improve these infrastructures. Constructing Padma Bridge, 26 kilometer long elevated expressway to reduce traffic jam, safe naval system, development of electricity sector and Setting up modern telecommunication system through the establishment second submarine cable are some important projects taken by the government. Education, training, research, public health, cultural development, ethical Views play an important role in the development of human resources. Current government has announced education policy 2010 to improve the quality of education and for the development of public health combined health; population and nutrition development sector would be in effect throughout the year 2011-16.

13. Privatization Programmes: Though our economy is a mixed economy the government has given importance on Privatization to maintain free market economy. For this purpose the government has taken various steps. After the establishment of Privatization Board (now Privatization Commission) in 1993, total 76 institutions have been privatized till February 2011. Among these 55 institutions were privatized by direct selling and 21 institutions by Selling shares.

14. Planning Various Projects: It is necessary to make proper planning for the economic development through combining public and private projects and efficient distribution of resources. On this purpose the government has taken "Bangladesh Vision (2010-2021) on the golden jubilee of our independence. The basic target of this vision is to increase growth, poverty reduction, making Bangladesh a middle income country and to reduce regional inequality. Form the above discussion we can say that, the economic condition of Bangladesh is getting better. Various projects have been taken for this purpose. Through the expansion of education and technology, there is an increase in skilled labor and manufacturer group. These people play an important role in increasing the production of the economy through self-employment and raising awareness.